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GCap Media on Wednesday said it was working with would-be bidder Global Radio to see if the two radio groups could agree a deal, as the Takeover Panel gave them until March 26 to reach a decision.

GCap had come under pressure from shareholders to talk to Global, run by former ITV chief Charles Allen, after the privately-held company on Tuesday increased its indicative offer to 225p a share.

If the proposed deal – which values GCap’s equity at £370m – goes through, it will make Global by far the UK’s largest commercial radio station with almost half total audience share. The Competition Commission is likely to order some divestments.

It would also mean that about 70 per cent of British radio stations will be in private hands.

GCap’s management had spent two days discussing the proposed offer with advisers.

The board, which had rejected indicative offers of 190p a share in January and 202p last week, held out against a sale, but came under pressure from investors to accept the deal.

Standard Life, which holds 7.5 per cent of the shares, said it hoped the company would “engage” with Global. Schroders, which has a stake of more than 16 per cent, privately expressed the same desire.

The raised proposal also came with fewer conditions attached than the earlier approaches. Global said it had financing in place and was prepared to go through with the deal subject to minimal due diligence.

It added in its proposed offer document that it would take on any risk arising from regulatory objections.

The proposed deal would bring together Capital, Classic FM and XFM with Global’s existing stations including Heart, Galaxy and LBC.

A sale would be a blow to Fru Hazlitt, GCap’s chief executive, who was appointed only in December and last month unveiled a plan to cut costs at the station, much of which would be achieved by pulling back from broadcasting digital-only radio stations and selling its Digital One transmission network.

GCap is the only one of the UK’s top four commercial radio companies that is still listed on the stock market. Bauer Radio (formerly Emap), GMG Radio and Global are all privately-held.